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Total Quality Management (TQM)


Total Quality Management (TQM) is a management approach which aims for long-term success through customer satisfaction. It involves all members of a company participating in improving processes, products, services, and culture. In TQM, quality is seen as fulfilling or exceeding customer expectations.


The phonetic pronunciation for “Total Quality Management (TQM)” is “Toh-tuhl Kwa-li-tee Man-ij-ment (T-Q-M)”.

Key Takeaways

<ol> <li>Continuous Improvement: At the heart of Total Quality Management (TQM) is the concept of continuous improvement. It is the idea that quality control and enhancements should be an ongoing process that is never complete. This involves constantly assessing and adjusting processes based on the feedback to achieve better efficiency and effectiveness.</li> <li>Customer-focused: TQM believes that the customer should be at the center of every decision a company makes. By taking into account the customer’s requirements and needs, a business can ensure that the products or services they provide satisfy the customer and meet their expectations, leading to increased customer satisfaction and loyalty.</li> <li>Involvement of All Employees: Total Quality Management recognizes the importance of every employee in the organization, acknowledging their role in the processes and promoting their involvement. Every team member is seen as a contributor to quality and is empowered to make suggestions and changes that could lead to improvements. The involvement and commitment of all levels of employees ensure that quality is everyone’s responsibility.</li></ol>


Total Quality Management (TQM) is fundamentally important in business/finance because it is a comprehensive and structured approach to organizational management that seeks to improve the quality of products and services through ongoing refinements in response to continuous feedback. The primary focus is customer satisfaction which ultimately results in increased profit and market share for the business. TQM allows a business to effectively and efficiently organize its operations, logistics, and resources to meet both its goals and the customer’s expectations, hence promoting business stability, sustainability, and growth. It fosters a positive work culture where all members of the organization participate actively in improving processes, products, services, and the culture in which they work.


Total Quality Management (TQM) is a strategic approach that organizations use to enhance their overall productivity and customer satisfaction. The key purpose of TQM is to instill a culture of quality across all aspects of an organization’s operations, ranging from product design and services to internal processes and employees’ attitudes. TQM aims to create a sense of responsibility towards quality among all members of an organization, underpinning the idea that maintaining high quality standards is not the exclusive role of a specific department, but rather the collective responsibility of everyone in the organization.TQM is used for numerous purposes, most notably to enhance customer satisfaction and enhance competitiveness in the market. Through a constant strive toward improvements and commitment to quality, organizations can identify and correct deficiencies in their operations, resulting in improved product quality and service delivery. TQM therefore facilitates the development of superior products and services that meet and exceed customer expectations, thus increasing customer satisfaction and loyalty. Furthermore, by leading to greater efficiencies and cost savings, TQM can also help organizations gain a competitive edge. Hence, TQM is an important tool in business strategy that helps in driving growth and profitability.


1. Toyota Motor Corporation: Toyota is a prime example of Total Quality Management implementation. They implement TQM in their workplace through a series of procedures and systems they call “The Toyota Production System”. This includes concepts such as Kaizen (continuous improvement), Just-In-Time Production (producing goods as they are needed to reduce waste), and Jidoka (automation with a human touch). Through TQM, Toyota aims to produce high-quality products and satisfy customer needs better than any other competitor.2. Motorola: Motorola’s Six Sigma Process is a perfect example of Total Quality Management. This approach aims to improve quality by identifying and eliminating causes of defects and ensuring consistency in manufacturing and business processes. It uses statistical methods to improve quality and involves all levels of the organization, from executives to employees, in quality assurance activities.3. Xerox Corporation: Xerox also adopted TQM principles to enhance their business operations. They use “Leadership Through Quality” approach, encouraging employees at all levels to seek out ways to improve service and products. Additionally, they engage in benchmarking, constantly measuring their products and services against those of the industry leaders to ensure quality and work towards continuous improvement.

Frequently Asked Questions(FAQ)

What is Total Quality Management (TQM)?

Total Quality Management (TQM) is a systematic approach aiming to achieve long-term success by satisfying the customer. It involves an organization-wide commitment to maintaining high standards of work in every aspect of the company’s operations.

What are the key principles of TQM?

TQM is centered around customer satisfaction, continuous improvement, employee involvement, and management by facts. It emphasizes quality maintenance from the beginning of a project, rather than trying to fix issues after they happen.

How does TQM benefit a business?

TQM can benefit a business by improving its reputation, efficiency, and competitiveness. It can enhance customer satisfaction and therefore increase customer retention, boost employee morale, reduce waste, and improve profit margins.

Can you give an example of TQM in a business context?

An example of TQM is a manufacturing company that focuses on eliminating defects and waste in its production process, through encouraging every employee’s commitment to maintaining high standards, and making decisions based on comprehensive analysis of data, rather than guesses or assumptions.

Are TQM and Six Sigma the same thing?

No, they are not the same thing. While they both aim for quality improvement, Six Sigma is a specific methodology focused on reducing product defects and variability, while TQM is a broader, more general approach emphasizing an organization-wide commitment to maintaining high quality standards.

Who can implement TQM? Is it just for big businesses?

TQM can be implemented by any organization, regardless of its size. It’s a flexible system that can be adapted to suit different types of businesses, from small start-ups to large corporations.

How long does it take to see results from TQM?

Implementing TQM is a long-term commitment. While some improvements may be seen relatively quickly, significant changes usually take time and require continuous efforts. The timeline can vary depending on the size of the organization and the complexity of its processes.

How to measure the success of a TQM program?

Success of a TQM program can be measured through various means including customer satisfaction surveys, reduction in defects or waste, improved on-time delivery, increased productivity, and financial metrics, such as profit margins. Regular reviews and audits are also an integral part of the management process.

What are the challenges in implementing TQM?

Challenges can arise from lack of commitment from top management, resistance from employees, insufficient training, poor communication, inadequate resources, and inability to adapt to change. These challenges need to be addressed for effective implementation of TQM.

Related Finance Terms

  • Continuous Improvement
  • Customer Satisfaction
  • Preventive Action
  • Process Management
  • Employee Involvement

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